The fastest way to lose money in Dubai property is to buy on the cap rate you saw in the listing. Nine times out of ten, that number is calculated on the sticker price, with gross rent, no vacancy, and no service charges. It has almost nothing to do with what will land in your bank account.
Cap rate is net operating income over the cash you actually put down. NOI is rent minus every recurring cost the unit carries — service charges (which in some towers are punishing), agency fees on every rental renewal, two weeks of vacancy a year, chiller bills if the developer is generous enough to bill you separately. Cash-out-the-door is the sticker plus 4% DLD, 2% agent, Ejari, Dewa deposit and the first round of furniture if it’s a short-let play.
On a typical AED 1.2M Business Bay studio I’ve run through this in the past year, the brokerage pitches 8% cap rate. The honest number, post everything, comes out between 4.8% and 5.6%. That’s the one you use to compare against a bond.
Related: NOI, Rental Yield, DLD Fee.
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